Budget watchdog finds little evidence of labour, skills shortages

Jean-Denis Fréchette, Canada's parliamentary budget officer, says there is little evidence of serious labour shortages or a skills mismatch problem in the country, in a new report published Tuesday. (HO, PBO/Canadian Press)

The government has made much of a skills mismatch to justify measures such as the foreign temporary workers program, stricter employment insurance eligibility rules and the Canada Job Grant program.

But the budget watchdog says there's no evidence to suggest the current situation is any different from that prior to the 2008-09 recession, and that some level of skills mismatch in an economy is normal.

"There is little evidence to suggest a national labour shortage exists in Canada, although there appears to be regional and sectoral pockets of labour market tightness," it says in a report Tuesday.

"Further, there does not appear to be a more acute national skills mismatch in Canada prior to the 2008-09 recession, although there may be exceptions in some regions and sectors."

The report suggests there are many pressing concerns about Canada's labour market. Almost five years after the recession, unemployment is higher, weekly hours worked are lower and wage growth across almost all industries is slower than before the slump.

The PBO also says any wage growth has been mostly among top earners, adding to income disparity.

Pockets of labour and skills shortages

The possible exception the PBO cites is Saskatchewan, which in February posted a 3.9 per cent unemployment rate, the lowest in the country.

As well, the PBO notes that although the labour market is below trend across most indicators, it is recovering from the recession.

In a response, a spokesman for Employment Minister Jason Kenney said the lack of evidence of a national shortage or skills mismatch does not rule out regional and sector-specific labour shortages or skills mismatches.

"This report is consistent with what we have been saying, that while there is no national labour shortage, there are regional-and sector-specific skills shortages, which employers have been saying for some time," said Alexandra Fortier, Kenney's press secretary.

"There is a paradox of too many Canadians without jobs in an economy of too many jobs without workers."

Of note in the PBO report is a section that suggests the Finance Department used less-ideal methodology, perhaps deliberately, to reach a conclusion that job vacancy was a growing problem when it released the Jobs Report analysis alongside the February budget.

The PBO says the government analysis failed to include market indicators relative to their structural levels "despite the Department of Finance having previously calculated trend estimates of labour market indicators."

As well, Finance did not analyze the current data in comparison to previous recovery periods, and appeared to pick and choose time periods for comparison without explanation.

The report adds that particularly among young workers, there is indeed a skills mismatch: young workers are often overqualified for their jobs.